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European Union leaders meet for final summit of 2012

The EU leaders are discussing closer fiscal ties for the currency union

European Union leaders have gathered in Brussels for their final summit of the year, which is focused on a massive restructuring of the eurozone's banking sector.

The leaders are discussing closer fiscal ties for the currency union, a drive that some worry has lost momentum since ECB President Mario Draghi calmed markets this summer by pledging to do "whatever it takes" to save the euro.

"We need to keep the momentum, keep the determination, keep the focus, and that is going to be my message to leaders this evening," said European Commission President José Manuel Barroso.

After a hectic year of crisis management, during which Greece had a close brush with the eurozone exit, the bloc appears to be heading into 2013 on a positive note.

A significant first step towards what is called a eurozone banking union was agreed last night by EU finance ministers, after 14 hours of talks.

In addition to this agreement, ministers also approved the release of nearly €50bn in fresh aid for Greece, averting a catastrophic default and the risk of the country’s exit.

Mr Draghi hailed the deal on banking supervision as an "important step" towards a stable economic and monetary union.

German Chancellor Angela Merkel, speaking on her way into the summit in Brussels, also praised the agreement, saying it would boost trust and confidence in the eurozone.

Olli Rehn, the EU commissioner for economic and monetary affairs, said "Cassandras" who had predicted the disaster for the euro had been proven wrong.

Under the deal sealed this morning, officials said the ECB would regulate some 150 to 200 banks directly, mostly major cross-border lenders and state aided institutions, with the power to delve into all 6,000 banks in case of problems.

"It's very good news that shows that step-by-step the eurozone and the European Union are coming out of the crisis," French Finance Minister Pierre Moscovici told reporters.